The free space optics (FSO) market is expected to grow from USD 0.27 billion in 2018 to USD 1.45 billion by 2023, at a CAGR of 39.58% between 2018 and 2023. Factors driving the growth of the FSO market include last-mile connectivity, no licensing, and alternative solution to overburdened RF technology for outdoor networking. The visible light communication (VLC) market is expected to grow from USD 2.56 billion in 2018 to USD 75.00 billion by 2023, at a CAGR of 96.57% between 2018 and 2023. Factors driving this growth are faster and safer data transfer, RF spectrum bandwidth crunch, and less energy consumption.

The FSO and VLC market mostly rely on the advancement of communication technology, standards, and advancements in application specific product offerings. Hence, organic growth strategy is widely adopted for the growth of these technologies. Opportunities for the growth of the FSO market include affordable extension affordable extension in existing fiber network, increasing number of space research programs, and replacement of old technologies with FSO technology for enterprise connectivity. Whereas, factors such as global acceptance of bidirectional VLC by different verticals and emergence of new applications such as internet of things (IoT) and 5G can generate huge opportunities for VLC market in the near future.

Among various components, the market for photodetector is expected to grow at the highest CAGR of between 2018 and 2023. This growth is attributed to the commercialization of bidirectional VLC. Photodetector will enable the Li-Fi to function as a bidirectional communication system (like a conventional broadband and Wi-Fi). Photodetector is the main component of bidirectional VLC that helps in detecting the changes in light intensity from the LED light source.

In 2017, bidirectional VLC technology, i.e., Li-Fi, was commercialized. Therefore, the market for this segment is expected to grow at a rapid rate during the forecast period. This is because the full utilization of special features of VLC is possible only with the bidirectional transmission. Some of the special features of Li-Fi include increased security, no health risks, and no licensing.

The FSO market for healthcare application is expected to grow at the highest CAGR during the forecast period. The FSO technology can be deployed in hospitals where wireless communication through radio waves is not allowed due to potential health hazards. Hence, the market is still untapped for the healthcare application, which offers enormous opportunities for the FSO market to grow significantly in the near future. On the other hand, the hazardous environment application is expected to be the fastest-growing application in the VLC market. The reason behind this tremendous growth rate is the unavailability of any substitute for communication in hazardous environments. In mines, oil wells, or petrochemical plants, RF cannot be used for communication in these areas as they are susceptible to electromagnetic interferences and can cause explosion.

FSO and VLC markets in APAC are expected to grow at the highest rate during the forecast period. The increasing manufacturing base, increasing number of communication service subscribers, and various government initiatives are the reason behind the growth of the FSO market in this region, whereas huge investments made in R&D activities of VLC/Li-Fi technology by both private and government organizations are driving the VLC market in this region.